Dubai house prices set to drop another 33%, says UBS

Dubai house prices, which fell the most during the global recession, will undergo another “meaningful” slump in about three months because of increased supply and restrictions on mortgages Bloomberg reported, cithing a UBS analyst.

Prices will drop an additional 33% to about AED600 (US$163) a square foot, said Saud Masud, an analyst in Dubai for the Zurich-based bank, in a phone interview late yesterday with Bloomberg.

People “feel the market is coming back and they are trying to hold off for a bit,” Masud said. “But that is not going to last because when more inventory hits the market and someone’s apartment sits vacant for six to nine months, they are going to cave in, and that’s when we’ll see the re-pricing of assets.”

The market is currently in a “numb phase,” and optimism is based on “few transactions,” Masud said. Prices will reach a bottom in about 12 months to 18 months.

Next year “is going to be tough, and I would be shocked if we started talking about a recovery in 2010,” Masud said. “Issues of excess inventory, litigation, financing and payment delays are still unresolved and clogging up the pipeline.”END

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